Why India’s green push needs balancing, why COP28 coal breather is important

India’s new coal thrust

At a review meeting held less than a week before the beginning of COP28, the Union Power Ministry decided to step up its coal-powered generation capacity, with plans to add at least 80 gigawatts (GW, where 1 GW is equal to 1,000 megawatts or MW) by 2031-32.

While this was broadly in line with the National Electricity Plan for 2022-27, the new blueprint for the country’s power sector released by planners earlier this year, it marked a discernible pivot and a policy reversal from earlier years — given that the central government had been focused almost entirely on renewable energy for incremental capacity addition, and fresh coal-fired capacity was virtually ruled out.

As on October 31, 2023. Source: Central Electricity Authority

The review, held on November 22 and chaired by Union Power Minister R K Singh, underscored the country’s resolve to revert to coal for desperately-needed baseload capacity, and agreed to add 60 GW of fresh coal-fired capacity in addition to the 27 GW of capacity that is already under construction.

As on October 31, 2023. Source: Central Electricity Authority

Problem with renewables

As part of its emission-reduction resolve, the government has consistently stepped up renewable capacity addition over the better part of the last decade.

To operationally sustain a huge average monthly addition of 1,000 MW from non-fossil fuels or renewables to the electricity grid, however, policymakers are now veering around to the view that the country simply cannot keep adding more green capacity unless it has viable energy storage options.

India is now the world’s third largest producer of renewable energy. More than 40 per cent of installed electricity capacity comes from non-fossil fuel sources, including large hydro, having risen sharply from just around 25 per cent in 2013. Solar and wind capacity is now more than 30 per cent.

While this green push has resulted in a 24 per cent reduction in emission intensity of GDP — ratio of total greenhouse gas emissions and gross domestic product — between 2005 and 2016, it has led to a situation in which the grid is increasingly powered by renewables, which creates the problem of intermittency, a significant challenge from a grid management perspective.

It is clear in policy circles that without storage, incremental renewable power capacity poses problems for grid managers. For procurers such as state-owned distribution companies (discoms), renewables are not always a viable option precisely due to these vagaries in the generation trends — which means they still have to depend on thermal or nuclear generation to meet the base load demand.

To counter the problem of intermittency, power utilities are forced to keep old thermal units on standby — but keeping these units operational results in payouts of high fixed costs. “The concept of renewables achieving grid-parity is proving to be farce. If the cost of standby thermal power is taken into account, renewable power is now almost twice its cost on paper,” an expert closely associated with the capacity addition plan told The Indian Express.

The question of storage

The decision at the November 22 review was a tacit admission of this reality, given that energy storage is desperately needed alongside green energy sources to counter the variability in renewable generation.

Electricity is generated only when the sun shines or when the wind blows, which is not always in sync with the demand cycle. Storage can help tide over this shortcoming, especially as renewables grow to become a big chunk of the installed generation capacity. Until that happens, stepping up thermal, especially coal, and nuclear generation are perhaps the only way forward.

India is the world’s second largest coal producer. The stipulation moved (unsuccessfully) at the Dubai COP28 meeting that no new coal-fired power plants can be commissioned without an in-built carbon capture and storage facility, would have effectively put India’s fresh coal-based capacity in jeopardy, given the added cost implications.

The renewed coal push comes at a time when there seems to be an emerging policy resolve in favour of not continuing to push solar and wind-based generation to struggling electricity discoms. The renewables challenge is compounded by the fact that Solar Energy Corporation of India (SECI) Ltd, the state-owned company conducting solar auctions, has locked a number of contracts involving green developers in rigid power purchase agreements (PPAs) with no scope for innovation, according to sectoral experts.

Storage is expensive currently, and the Lithium-ion storage battery option for grid application is being ruled out as unviable, at least for now.

The government is considering two alternatives: hydrogen and hybrid generation models blended with off-stream pumped storage.

But there is a recognition that coal-fired capacity needs to stay as base load for the time being, given that there are constraints on ramping up nuclear capacity.

The decision to increase new coal generation capacity to the tune of 60 GW is way higher than the Electricity Plan draft’s prescription for fresh coal-based capacity ranging from 17 GW to 28 GW till 2031-32.

The renewable energy thrust of the last 10 years also meant a projected battery storage requirement in 2031-32 of between 51 GW and 84 GW, and assumes a daily usage rate of 5-hours, according to the draft.

This, at estimates of Rs 10 crore per MW, could translate into investments into battery storage of between Rs 5 lakh and Rs 8 lakh crore over the next 10 years as backup for renewable capacity — that too for operations for less than a quarter of a day on average.